I was once an Assistant Manager of a branch bank. The manager was a highly respected man by the name of Enos Price. We were in his office one day when he called my attention to the crowded lobby. He said, (paraphrasing) “Look at those people. They’re depositing money they need to feed their families and pay bills. They trust us to keep it safe. Whatever you do, don’t forget that.” (more…)
February 28, 2010
February 21, 2010
Banks – What To Do – Part Three
“Too big to fail” is an interesting concept. So far it has cost billions of dollars. Is it likely to cost more? What did we get for the money? The concept is yet unproven – we don’t yet know if “big” is better. What if “big” ultimately leads to failure? Furthermore, what is “big” doing for, or to, American culture? Does “big” apply only to banks? (more…)
February 18, 2010
Banks – What To Do – Part Two
Former Treasury Secretary Henry Paulson has written a book entitled “On The Brink”. There’s an article about it in the February 15th issue of Business Week. This is an excerpt: “Henry Paulson recalls dining with some of Wall Street’s most powerful bankers on June 26, 2007, not long before the credit bubble burst. ‘All were concerned with excessive risk taking in the markets and appalled by the erosion of underwriting standards,’ … Yet they felt forced by competitive pressure to make loans they didn’t like… ‘Isn’t there something you can do to order us not to take all these risks?’ was the gist of a question posed by Chuck Prince, who was still running Citigroup as the bank bumbled toward disaster.” (more…)
February 15, 2010
Banks – What To Do – Part One
Those of you who know me are aware that I was once a banker. I managed to reach the level of Senior Vice President with a subsidiary of Maryland National Corporation, the holding company for Maryland National Bank. I spent fifteen years in banking, followed by another short period in the late nineties. I believe my experience gives me a pretty good idea of how banks work and how they fail. During those years I witnessed three periods where the banking industry got into trouble, resulting in the failure of several large banks. Since leaving the industry, I continue to watch developments with great interest. This is not just because I worked in the industry, but also because many of my friends still do. I consider myself pretty knowledgeable of the industry, how it operates and how mistakes are made. (more…)
February 10, 2010
The Pain of Too Much Debt
Recently, a lot has been written about the possible impact of too much federal debt. Some discuss the deterioration of society, the loss of military power, the effect on the dollar, and, of course, rising interest rates. Some predict these events will start when total federal borrowing reaches 90% of Gross Domestic Product. Others say it will occur later. I may not hold as many high powered degrees as some, but I know that you and I have already paid, and are paying, a price for too much debt. (more…)
January 31, 2010
Executive Pay
The astronomical level of executive pay in America is beyond comprehension to most of us. While many are outraged, this is not an issue that begs government intervention. Government regulation of pay is never appropriate in a free society. There are market based solutions available that should be employed. I oppose regulation, but, as I said in a previous article, it is often the role of government to create a proper environment wherein market based solutions can function. This is one such example.
We have structural problems in this country that allow distortions to exist. Very simply, we who are empowered to prevent these distortion have been neutered, in part by our own apathy, but largely by misled government regulations intended to protect us from ourselves. (more…)
January 28, 2010
Where’s The Outrage?
We’re all aware the demonstrations of 2009 (continuing into 2010) took the name “Tea Party” to reference the Boston Tea Party. Some participants even wore tea bags hanging from their hats. This was all done to make the very serious point that many Americans feel ignored and betrayed by government and intend to bring about change.
The government, represented mainly by the Democratic majority, viewed the tea parties with contempt. This reaction essentially proved the demonstrators’ point (more…)
